PERTH, Western Australia - Australian Oil and gas major Santos Friday announced a significant gas-condensate discovery at the Lasseter-1 exploration well in WA-274-P, located in the Browse Basin offshore Western Australia.

The Lasseter-1 well is located approximately 35 kilometres east-southeast of Santos' Crown discovery and 480 kilometres north-northeast of Broome. The water depth at location is 404 metres.

The well intersected a gross gas condensate bearing interval of 405 metres. Wireline logging to date has confirmed 78 metres of net pay over the Jurassic-aged Lower Vulcan and Plover intervals, between 4,880 and 5,285 metres MDRT.

The well reached a total depth of 5,329 metres measured depth relative to rotary table (MDRT), the company stated reporting a 3 percent rise in underlying first-half profit to $258 million and 33 percent increase in interim dividend

The 2014 first half result reflects record sales revenue driven by higher crude oil and LNG sales volumes, and higher oil and gas prices, offset by the previously announced non-cash impairment of the company's Indonesian coal-seam gas assets, and higher cost of sales, exploration expense and net finance costs, the company reported.

Managing Director and Chief Executive Officer, David Knox, said: "The first half of 2014 saw Santos achieve its highest oil production in six years, record sales revenue and strong operating cash flow."

During a conference call with analysts, Knox said the Lasseter gas condensate discovery added to the success of its Crown find nearby two years ago and could be developed with other prospects in the area such as Ichthys, run by Japan's Inpex Corp, and Poseidon, operated by ConocoPhillips.

The company stated that multiple hydrocarbon samples have been recovered and the initial analysis confirms a condensate to gas ratio in the range of 10-25 bbls/mmscf and inerts consistent with proximal field gas compositions and pre-drill expectations.

The well encountered 400 metres of hydrocarbons and might confirm a resource of 10 trillion cubic feet of gas, Knox said.

"These are the type of results that really shift thinking and shift understanding of the whole area," Knox said.

The well will now be plugged and abandoned as planned.

"Lasseter is a material discovery that adds to our strong position in the Browse, following our success with the Crown discovery in 2012," stated Bill Ovenden, Head of Exploration.

"The Lasseter discovery is well positioned, in close proximity to existing and proposed LNG projects in the Browse Basin and other material Santos joint venture exploration prospects. The Lower Vulcan reservoir system, which is optimally developed between the Ichthys and Poseidon structural trends, holds great promise," Ovenden said.

Santos holds a 30 percent interest in WA-274-P and is the operator. Joint venture partners in the block are Chevron with 50 percent stake and INPEX holds remaining 20 percent .

Knox said the company had performed well in the first half and reaffirmed guidance for a lift in full-year production to between 52 and 57 million barrels of oil equivalent.

The company reported that its sales revenue during the first half year increased to $1.8-billion, compared with the $1.5-billion reported in the previous corresponding period, as sales volumes increased by 5 percent, to 28.9-million barrels of oil equivalent.

One-off writedowns to a coal seam gas project in Indonesia the company had withdrawn from, sent the net profit down 24 per cent to $206 million for the six months to June 30.

It lifted its interim dividend from 15 to 20 cents per share, partly because extra cash was flowing in from the new Papua New Guinea liquefied natural gas (PNG LNG) project that it is a partner in. The PNG LNG project commenced production ahead of schedule in April.

"The start-up of PNG LNG and receipt of first cash from the project has enabled the company to substantially increase returns to shareholders through a 33 percent increase in the interim dividend to 20c per share, fully franked," said Santos chairperson Ken Borda.

"PNG LNG is producing at full capacity, and GLNG is more than 85 percent complete and on track to start-up next year, within budget. We remain focussed on growing shareholder returns as the company's earnings and cash flows increase," Knox said.